Prosperity Watch Issue 60, No. 4: Personal income in North Carolina not keeping up with neighboring states

Income data shows that economic policy coming out of Raleigh is not making most North Carolina families more prosperous. We continue to benefit from a comparatively strong economy across the Southeast, but North Carolina is by no means leading the way.

A recent analysis by the PEW Charitable Trusts shows that personal income in North Carolina increased by 3.2% between the 4th quarter of 2014 and the end of last year. That record is slightly ahead of the national rate of income growth over that time span (2.9%), but not enough to make our state an income growth leader. In fact, personal income in North Carolina lost ground to all of our neighboring states, including Virginia, Kentucky, Tennessee, South Carolina, Georgia and Florida.

The recent income growth that did occur in North Carolina is likely tied to regional economic dynamics, not state policy coming out of Raleigh. None of our neighboring states have cut taxes or slashed unemployment benefits to the degree we have seen here in North Carolina, and yet they all posted better rates of income growth. If cutting taxes and defunding unemployment were the keys to prosperity, North Carolina would be king in the Southeast, but that’s not how the economy actually works.

North Carolina's income problem is likely even deeper than it would appear here. Because these data include income generated by investments like capital gains and rental properties, it can appear that incomes are growing even if many North Carolina workers have not seen a raise. Along similar lines, these data do not show how workers in different income brackets are faring. Job growth in North Carolina in recent years has been somewhat divided, with much of the growth coming at the very top or bottom of the wage scale. As a result, North Carolina's growing income can hide the fact that a huge number of workers at the lower end of the income distribution have not received a bump in pay.

Modest income growth is better than nothing, but North Carolina's recent track record is not going to solve the economic challenges we face